'Last Best Chance' for Renewable Energy Tax Credits?

Washington, D.C. United States [RenewableEnergyWorld.com]
With Wednesday's passage of a House bill that could extend the production and investment tax credits, many in the industry are cautiously hoping for an end to a political standoff that has threatened to cripple the nation's renewable energy industry.

"Pretty soon there could be escalating negative consequences down the value chain if something isn't done. Congress needs to pass these credits and pass them quickly."
-- Jeff Deyette, Analyst, Union of Concerned Scientists

Some advocacy groups worry that the latest legislation is the final opportunity to get the tax credits passed before the industry starts seeing serious slowdowns in the market.

"This House bill, coming in the wake of so many other failed attempts to pass similar legislation, is really our last best chance to extend the tax incentives," said Chris Stimpson, executive campaigner for the grassroots advocacy organization Solar Nation. "While Congress often passes last-minute extenders in December, we shouldn't hold our breath for that either."

Called the Renewable Energy and Job Creation Act of 2008, the bill extends the production tax credit (PTC) for one year, extends the investment tax credit (ITC) for six years, and authorizes $2 billion for new clean renewable energy bonds to finance renewable energy facilities.

Now the tax extension package moves onto the Senate where it is expected to face an uphill battle because of disagreements over how to pay for the credits — an issue that has hindered the process from the start. According to industry lobbyists, the House Ways and Means Committee has been working closely with the Senate Finance Committee to figure out a funding source that is acceptable to both chambers of Congress; however, it appears that any "pay-fors" demanded by Democrats are not agreeable to most Republicans.

The latest US $20 billion tax package for renewables is offset by closing a tax loophole that allows employees of specific offshore corporations (i.e. hedge fund managers) to avoid taxes on their compensation. While this funding source has been agreed upon by the respective House and Senate financial committees, it most likely will not have support from the broader Senate. This has industry representatives in Washington frustrated about the possibility that the tax credits will yet again be squashed because of funding disagreements.

"For the Senate, the choice is now clear: they can either protect tax loopholes for privileged investment managers, or create tens of thousands of green-collar jobs in a troubled economy," said Rhone Resch, president of the Solar Energy Industries Association (SEIA) in a statement issued after Wednesday's House vote.

There is some speculation that election-year politics are dragging the process out. When Democrats took over Congress in 2006, they promised never to pass spending legislation without getting funding from somewhere else. Not wanting to stray from that initial commitment and look hypocritical to the electorate, party leaders are not budging from their "pay as you go" policy. Meanwhile, in an attempt to distinguish themselves, Republicans have disagreed with the funding sources for the credits proposed by Democrats. This may be an attempt by both parties to paint the other as hindering progress, say some analysts.

"As a result of this happening in an election year, you've seen lines drawn in the sand and bills bouncing back and forth. There's been some progress in recent months, but it's certainly made things more difficult," said Scott Sklar, president of the consulting firm The Stella Group.

To further complicate matters, the latest bill could be vetoed by President Bush if it does get through the Senate. Earlier this week, the President's advisors recommended that he block the legislation because, yet again, the proposed offsets are unacceptable to the administration.

By most accounts, this year was supposed to be the tipping point for renewable energy in the U.S. With ever-bigger wind and solar projects going up at a breakneck pace, the mainstream news media jumping on any story about the "greening" of America and politicians of every stripe declaring renewables a national priority, the pieces seemed to be falling together. The only problem, say analysts, is that the industry still can't get the long-term support it needs to do the job expected of it.

"We simply aren't going to create more jobs, pour billions into the economy and diversify our energy supply if we don't get the support we need," said Sklar. "We have to remain hopeful that we'll reach a deal. But if Congress somehow flubs this thing...they are going to see a lot of companies go out of business and a lot of people lose their jobs."

There have been a spate of reports released over the last year addressing the renewable energy industry's contribution to the U.S. economy. A recent report from Navigant Consulting found that the failure to extend the PTC and ITC could result in the loss of 116,000 jobs and US $19 billion in economic activity through 2009. Broken down by industry, the report predicts 39,400 jobs lost in the solar sector and 76,800 jobs lost in the wind sector.

While next year's prospects look grim for the industry if it can't get an extension of these tax credits, most analysts and companies are staying positive about the U.S., which could be the biggest renewable energy market in the world.

"It is a shame that we're at this point...But I don't think people are just going to give up on this market. It's such an enormous opportunity," said Reese Tisdale, a senior analyst at Emerging Energy Research.

Some big announcements over the past year have shown that there is still confidence in the U.S. Vestas plans to build a US $245 million wind tower manufacturing facility in Colorado, creating 400 new jobs. Siemens plans to double capacity at its blade production facility in Iowa, creating 200 additional jobs. And SCHOTT Solar has broken ground on its US $500 million New Mexico facility that will manufacture photovoltaic modules and receiver tubes for concentrating solar power plants. All three companies have expressed their hope that the U.S. Congress will extend the tax credits.

"That's not to say that there are not other manufacturers out there...who aren't concerned about the market...and I think the regulatory environment has a lot to do with it," said Tisdale.

Most analysts say that if the tax credits are not extended by this summer, financing will start to go away, projects will be dropped and jobs will be lost. The extent of the negative economic impact will depend on how many projects companies can realistically develop before the end of the year. In the meantime, trade groups in Washington are working overtime to make sure those project pipelines don't get disrupted.

"I think everyone expects that we'll extend these credits somehow," said Jeff Deyette, an analyst with the Union of Concerned Scientists. "But pretty soon there could be escalating negative consequences down the value chain if something isn't done. Congress needs to pass these credits and pass them quickly."

Benford's law of controversy, as expressed by science-fiction author Gregory Benford in 1980, states "Passion is inversely proportional to the amount of real information available."

So . . . opinion # 2. . . Global warming is happening! It has been happening for millions of years! We warm up then we cool down! FACT. We think we are creating this issue, but how much of it is just "normal" We do not know.

But what can we as inhabitants of this planet do to "Control Ourselves" to help sustain this "living planet" long into the future.

"We" have to change!

Population control, emissions control and on and on . . . we have to re-invent the wheel! And each and every one of us has a different idea as to what we should do or not do. So that brings us to LEADERSHIP. . . Next!

Oh and for Thomas, Lowering the cost of installations can only happen if all other costs decline as well - that is for all of us "licensed & legal" companies. Look on the internet, you'll see companies offering systems anywhere from 3% to 5% markup. That leaves you with having to make a profit (from which I would pay my bills) on installations - by the time you pay W.C., taxes / S.S. payments and your expenses you have broke even if you are "competitive" . So how do I as a small business "lower my costs to the end user?

And Rolf - If oil companies made 41 Billion & paid taxes of 20 Billion in taxes Why do they "need" 2 billion in subsidies???
"Stupid is as stupid does." Forrest Gump's mother.!

It's the same old song, democans and republicrats afraid to upset their sugar daddys.
Do you know the definition of an honest politician?

It's one that STAYS bought.
We won't really support renewables in this country, at the federal level, until we HAVE to. Or until the big boys get into the RE industry.
I really hope Shawn is right, but I'm not gonna hold my breath.

Rest assured every red blooded politician has Green Stock in his or her portfolio and is buying more on the cheap!

As for the latest bill proposal, it won't happen. Why - because "we" need it. Its not about a greener planet but who is in control of those green companies, keeping the "good 'ol boyz" in DC in power & in control.

For my next statement my apologizes in advance - We have become fat, stupid and lazy. Like sheep to the slaughter. If your local politician doesn't vote for the bill - fire him! He / she is supposed to vote "OUR" collective conscience NOT his opinion of what he thinks is good for us. - If we are wrong then we are responsible for our fate not these idiocrats.

I am with Pete! Politics is a power game and most of these folks exist by virtue of connections rather than gray matter high functioning activity.

The power elite feeding the non RE traditional industries have a good
revenue stream, so why stop feeding at the trough when the slop keeps coming.

Also, face the fact that they are as addicted to the slop as we are to
energy. Part of the solution is for us to tighten our belts a little regarding
consumption. We better be ready to walk the talk or we are just whiny babies who want energy and money to be infinite. Consider Efficiency and usage habits as the one thing which is in our control. It is same as fuel source supply injection....by offsetting demand we stretch our available fuel life.

Remember supply and demand....I know they do not acknowledge a supply/demand crunch. That would compromise their power position with us and may cause a need to work on creative solutions to our situation.

When we finally wake up from the hallucination that our best interests
are being tended by them, maybe a grassroots effort will emerge to tell these fat cats what we REALLY want.

Look at the long term thinking and ACTION by leading technology driven counties like Germany to foster a climate of sustainable life. They are where we could have been with long term focus.

Now after a protracted war for oil we are too strapped for cash to add tax support for RE credits. Maybe rather than strip the support for conventional energy sources, split the support with the RE industry. That would level the playing field and let the better technology emerge. This would also let the Dems maintain their position of pay-as-you-go and wean the oil and coal
industries off the dole.

Be happy you don't get all the government you pay for....or we would really be in trouble.

Let's be clear here that it is the Senate Republicans and President Bush that are holding the tax credits hostage to protect tax breaks for the wealthy. The Democrats have tried repeatedly to pass them. The tax credits should be paid for because our national debt has skyrocketed under Bush. To just pass them without some source of funding is irresponsible. It is the state of our economy that has caused the dollar to plummet in value and driven oil and gas prices up where they are now. The inflationary impacts of this are going to further drive our economy down. We are all paying for this stupidity.

Once again, if solar and wind are so good, why all the taxpayer subsidies.
Subsidies to the oil and gas industry last year were about $2 billion. Exxon paid $30 billion in 2007 just in income taxes. How much did the ethanol and solar industries pay in income taxes in 2007?

Hopefully oil will be $200 or $300 by the fall, and when there's a million unemployed people marching down the Mall, THEN maybe the walking dead in D.C. will wake up and smell the coffee.
Why is it the USA can spend $400 million a day in Iraq, but can't cough up a few pennies in tax credits for its future?
Brazil is looking better all the time....

Most fossil fuel companies are doing nothing to mitigate global warming, and many are fighting efforts to do so. Our trade deficit is killing the US dollar, thanks in large part to oil imports and, more recently, natural gas imports. Despite official claims to the contrary, the $3 trillion + Iraq war was largely about control of oil (read Armed Madhouse by Greg Palast). If that isn't enough to persuade you that renewables are worth funding, how about sticking the oil and coal industries for the cost of health care required due to air pollution? Don't you think that you and I are subsidizing that for them?

The wind industry deserves no sympathy. Their path of begging for mandates and subsidies each year has to come to an end sometime. They should be demanding de-monopolization of regulated and deregulated power markets.

rolf is entirely incorrect and naive to think 2 billion is the # more like 15-40 billion. Ethanol and Solar / Wind are locally harvested. They (renewables) are producers rather than drainers(VAMPIRES) of energy. When they start funding the 'war' in iraq, oil companies can talk about their share of true costs of our oil addiction. There are thousands of jobs being created annually in the places that are pro-active in the 'subsidizing' of renewables.

Maybe it is best if we kept politics out of the loop anyway. They are the ones that will create problems. If we let them control renewables, then they will become the electrical barons of the future just as they have become the oil barons of today. We don't need their incentives or rebates. We need the manufacturers and installers of renewables to become more competitive to lower prices in order to get more installations for people to see and to make products that are affordable. We need education for the general public on how best to invest in renewables. Personal systems that rid us of large power companies should be the goal. The more we feed into the existing structure the more they will take advantage of our connection. This is why SHW is on the back burner. They cannot make money off of it. All the time and money wasted to convince a few hundred people to give us a little rebate should be spent on getting the technology out there at a reasonble price or even free when considering the money spent on "hot air" blown into Washington.

What a waist. The US has no long term strategy on renewables. Without such strategy and goals/milestones there is no way you can define the proper tactics to achieve these goals and assess the right stimulus package to support it. The legislation is a waste of tax payer monies: (1) This type of stimulus packages only benefit the large businesses that are not short of borrowing capacity and have leverage to get this free money, (2) Once the benefits are gone, so will be the expansion of the renewable energy sector. The renewable energy sector needs to lobby not for free cash (subsidies/tax credits), but for a long term plan to increase the percentage of renewables in the power and heat generation in the US where both the public and the private (including consumers) sectors reaches a long term commitment. Once the strategy and plans are define, we can then look seriously to the best combination of market and government incentives to make this happen.

I think Keith and Frederico are on the right track. The key being that primary energy is treated no differently than marshmellows by our government. 90 days is an ill suited time frame for energy planning. I studied comparative economics in college, and one successful trait that kept arising in comparative studies between countries, is that those countries that planned and implemented better, did better.

This is how Germany today, and China in the near future will hand us our hat. The "free market" evangalists here say the competition should be fair. But I believe the "invisible hand" is really just those impacts we don't understand or control.

Wake up, we are running out of fossil fuels fast. Our inability to control the human population only exacerbates the issue. Our government must commission studies from the universities and research institutes to determine the best way forward in our energy future, make a plan, and implement. If the best plan says we must tack an additional 10% tax per year onto fossil fuel prices to fund alternative transportation, efficiency, building retrofits, etc., than so be it. It may cost more today, but if we don't act soon, it won't matter anyway.

Wouldn't it be easier knowing what our fuel prices will be even if they are always going up, than suffering the chaos of the free market. Energy is one of those underlying costs that underpin the cost of everything else. I don't want the wind blowing energy prices, I want it powering my home.

Recent EPA and DOE studies suggest U.S. industries waste enough heat to generate an estimated 200,000 megawatts of power - nearly 20 percent of what this nation uses. That's enough electricity to replace up to 400 coal-fired power plants.

"We think we could make about 19 to 20 percent of U.S. electricity with heat that is currently thrown away by industry," he says. "This electricity is just as pristine as making it with a windmill or making it with a solar collector - no additional fuel, no additional pollution. Just a little bit of additional brains."

Or maybe congress knows something about the renewable energies industry that the rest of us dont.
I dont see anybody in the renewable energies industry starving or living in poverty or even below stansard. In fact, I see just he opposite.
Can any of you tell us, what is the average yearly income within the RE industry adminstrative hierarchy?
Maybe the RE industry would not need to be so dependent on American taxpayers money if....

It seems that all these "bills" are just another way to confuse the public. With OPEC gouging, you'd think the government would forget about all these costly PV instalations and instead declare imenent domain upon the solar printer! Or better yet, mandate about 2/5ths of the Mohave to be covered with mirrors. solar thermal is the most efficient, and can contain concentrated PV as well, (which is even more efic). Also, unlike a desert covered with dark (hot) PV panels, mirrors do double duty for the fight against global W by reflecting a lot more light back into space (to offset the loss of reflection due to melting glaciers)

Now, that would be a worthwhile subsidy!

Even without the help, just every household alone could foot the entire bill for the cost of a pack of cigs a day for thirty years... To displace MOST of ALL fossil fuels the U.S. uses...

What is shocking is that our Congress hasn't agreed to spend money on this one. The politics and potential press coverage favor the spending. Its an election year, oil is at $130 plus a barrel and these are jobs being offered in a slowing economy.

The PR aspect of passing this bill seems to over shadow any negative aspect, like over paying 4x what something is worth Solar PV or giving subsidies to Wind when it doesn't need it.

When Oil is at $130 per barrel, people want to think we are doing something to make us less dependent. It purely mental. You got to do something to keep the uneducated and ill informed mob happy.
This bill is it.

Like a carrot held before a stubborn donkey,
Will the Senate now reach out and take a bite,
Tax credits needed now will make our country proud
Clean energy's the way our Congress should vote.

Our leaders lead the way with their vioices,
But when it comes to thinking can't make choices,
That will take our country forward and set us rightly toward,
The path that frees us so our land rejoices.

democrats have promised to adhere to pay-as-you-go and they have not broken that promise. Calling this "hindering progress" has no logic and everyone sees it is simply political.

but look, the nationalistic aspects of renewable energy initiatives are going to have to be emphasized in order to get certain republicans on board. perhaps sell energy independence as the best aggression towards the middle east, homeland security, good vs. evil, that type of thing. trying to convince many republicans (not all) of the virtues of green energy, cleaner environment, cooperation and responsibility, conservation, global warming etc is just not going to work! there must be a nationalistic, aggressive or self-centered aspect to any legislation or they will summarily slap a "liberal" label on it and give it little attention.

...and just as Noah pulled the ramp and shut the door, he heard a knock. "Did I forget a Yak, or maybe a Zebra?" queried Noah. Thought the storm winds began to blow harder, he opened the door one last time and who did he see at the ark door but Jim Berry.

One year!!! How can any industry get its feet on the ground and develop with this type of sword hanging over its head. How about a new constitutional ammendment to extend the politicians terms a year at a time? We might see better performance from them under those circumstances. We continue to fiddle while Rome burns around us.

PS- With the current prices of fuel and fertilizers, I'm not sure the farm bill will add much to production. Even at today's prices most farmer's will be hard pressed to turn a profit.

I suppose it is silly to suggest that the massive de-facto subsidies and tax credits we are now giving to fossil fuels should be subjected to the same Pay-Go standard they are forcing upon renewables. No, this is one last twist of the knife from Bushco on their way out the door. In a way, there might be a benefit to having the tax credit collapse this year, and have people laid off. If so, we must fill the media with stories of cancelled renewable energy projects in the midst of $160 oil. The mushy support that John Q Public gives to alternate energy might just be turned into real, angry advocacy. Instead of a one year PTC, we'll get several years.

I think it's easy, if they don't pass the bill to extend the tax credit have them also stop the incentives that go to oil, fossil fuels and nuclear. They have been on going for over 30 years. It's time they stop !

The real answers would be very clear if there were NO incentives or tax writeoffs for any fuels !

What is shocking is that our Congress hasn't agreed to spend money on this one. The politics and potential press coverage favor the spending. Its an election year, oil is at $130 plus a barrel and these are jobs being offered in a slowing economy.

If you compare this bill to the recently passed and veto farm subsidies bill, this energy bill seems financially reasonable and a good deal! Of course, nearly anything compared to the farm subsidies bill could make that claim. But If we could choose only one, this one would get my vote.

Wow, I just choose Solar PV. What is the world coming to?

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I am a reporter with ClimateProgress.org, a blog published by the Center for American Progress. I am former editor and producer for RenewableEnergyWorld.com, where I contributed stories and hosted the Inside Renewable Energy Podcast. Keep...